August 15, 2003

Univision Merger Could Affect Millions Who View Spanish Media

By Sergio Bustos

WASHINGTON  Controversy over the proposed merger of two major Spanish-language media companies could affect millions of U.S. Hispanics who rely on Spanish-language radio and television for news and entertainment.

Univision, the nation’s largest Spanish-language television network, is seeking the federal government’s approval to merge with Hispanic Broadcasting Corp., the nation’s largest Spanish-language radio network.

Executives of the two companies say they need to combine to compete with English-language media conglomerates like Fox, Viacom and AOL Time Warner.

Critics of the proposed marriage, especially other Spanish-language media companies, charge that permitting the $2.3 billion deal to go through would allow a single company  one that serves the largest minority group in the country  to dominate the Spanish-language airwaves.

Decision coming soon: The Federal Communications Commission could decide as early as Monday whether to approve the proposal. Analysts believe the FCC will OK the deal. The Justice Department has already signed off on it.

The proposed merger got little public attention last July when it was first filed with the FCC. But in the last month, it has triggered a nasty political and personal battle.

Supporters and opponents have purchased ads in major newspapers attacking each other and have recruited some of the nation’s top Democrats and Latino leaders to argue their cases.

Univision and HBC have tapped Democratic Gov. Bill Richardson of New Mexico, the nation’s only Latino governor, and former Housing and Urban Development Secretary Henry Cisneros, a former Univision president, to defend the merger.

On the other side of the debate, Senate Minority Leader Tom Daschle, D-S.D., Sen. Hillary Rodham Clinton, D-N.Y., Sen. Edward Kennedy, D-Mass., and House Democratic Caucus Chairman Bob Menendez, D-N.J., have joined opponents in denouncing the merger.

Key issues: Among key issues the FCC must resolve is whether the Spanish-language audience is a distinct media market from the English-language audience. FCC officials also must weigh how the merger would affect diversity and competition within the Latino community.

The United States is home to about 39 million Hispanics and at least 28 million speak Spanish at home, according to the latest census estimates.

Although they broadcast in Spanish, Univison and HBC executives argue that they must compete with the country’s leading English-language-media conglomerates for advertising dollars. Univision said it receives just 2 percent of total television ad dollars despite drawing 5 percent of the national prime time viewing audience.

“Why shouldn’t a Hispanic media company get a chance to compete on an equal footing against Disney, Viacom, News Corporation, AOL Time Warner and the rest of the media establishment?” Richardson said in an open letter to Democratic leaders in Congress.

“With this merger, a Hispanic-run media company will finally have the scale and scope to attract those national marketers that currently advertise only on English-language media,” he said.

“Unacceptable” power: Opponents charge that approving the merger would keep out other Spanish-language competitors and reduce the number of news outlets within the country’s vast and diverse Latino community. They contend that about one in four U.S. Hispanics speak little or no English and receive all their news and information from Spanish-language media.

“This deal will create unacceptable market power in Spanish-language media in this country,” Menendez said. “Virtually all Hispanics would see and hear their news and entertainment from a single source: Univision.”

The company already dominates the Spanish-language television airwaves, reaching 97 percent of all U.S. Latino households. Its only Spanish-language competitor is Telemundo, which is owned by NBC and General Electric.

Univision owns and operates 53 television stations along with two Spanish-language television networks, Telefutura and Galavision. Net revenues last year topped $1 billion.

HBC is no bit player, either. It operates more than 60 radio stations across the country and had net revenues last year of $256 million.

Opponents question whether the FCC, controlled by Republicans, can make an unbiased decision on the proposed merger when Univision CEO A. Jerrold Perenchio is a major donor to the Republican Party.

Perenchio is among an elite club of “pioneers” who have raised at least $100,000 for Bush’s 2004 re-election campaign, according to the Center for Responsive Politics, a campaign finance watchdog group.

But he also has contributed campaign dollars to Democrats. He gave $150,000 to Richardson’s New Mexico gubernatorial campaign. Richardson said the contribution had no influence on his decision to publicly support the merger.

A spokesman for Univision did not return calls seeking comment.

“Last nail in the coffin”: Among the loudest critics of the deal is Spanish Broadcasting System Inc., a company that stands to lose the most if the merger is approved. It owns 27 Spanish-language radio stations in seven of the top 10 Latino markets.

CEO Raul Alarcon Jr., who unsuccessfully tried to merge his company with HBC, said he is troubled with the idea of having a non-Latino, Univision’s Perenchio, control a media conglomerate that serves the Latino community.

“This transaction is the last nail in the coffin of Hispanic media ownership,” Alarcon said.